The six-month US-Israel war with Iran has created sharply different outcomes across the global economy. While oil companies, defence firms and banks have benefited from higher energy prices, military spending and market volatility, airlines, carmakers, taxpayers and low-income households are facing rising costs and weaker demand.

The biggest gains have been seen in the energy sector. The closure of the Strait of Hormuz and attacks on energy infrastructure across the Gulf have pushed oil prices higher, helping several major producers improve their earnings. ExxonMobil reported a quarterly profit of $14.5 billion, while Chevron posted $12 billion. 

TotalEnergies earned $6 billion, and Shell and BP more than doubled their year-on-year earnings to $9.8 billion and $5.73 billion, respectively. Saudi Aramco also reported a profit of $33.4 billion, around one-third higher than a year earlier.

Defence companies have also emerged as major beneficiaries as the US and its allies increase spending on missiles and air defence systems. RTX received a $22.9 billion contract to expand Tomahawk missile production, while Lockheed Martin secured a contract worth up to $58.6 billion to increase Patriot interceptor production.

Banks are benefiting from increased trading activity and market volatility. JPMorgan, Bank of America, Citigroup and Wells Fargo together reported $42.5 billion in second-quarter net profit, while HSBC’s profit rose 60% to $10.1 billion.

Airlines and automakers, however, are under pressure. Higher jet fuel costs, restricted airspace and longer flight routes have hurt airlines, with Middle Eastern carriers expected to face a combined $4.3 billion loss. Carmakers are also dealing with higher material costs, supply disruptions and weaker demand. Toyota’s global sales fell almost 5% in July, while Volkswagen’s second-quarter earnings dropped by nearly one-third.

The conflict is also strengthening the case for renewable energy as countries look to reduce their dependence on oil and gas. At the same time, coal producers are benefiting as some economies search for alternative sources of energy.

For the global economy, the war is therefore creating a mixed picture, with gains concentrated in energy, defence and finance, while higher costs are spreading across transportation, manufacturing and households.

The future of investing is here!
Tradz by EquityPandit leverages advanced AI technology to provide you with powerful market predictions and actionable stock scans. Download the app todayand 10x your trading & investing journey!